Decision Pressure Ahead of Multi-Million Transaction
A well-known German private debt fund was preparing for a significant transaction: providing capital for an acquisition by a private equity company. The deal structure required an in-depth risk assessment. As part of the commercial due diligence, urgent technical expertise in injection molding was needed to realistically evaluate the value of the target company.
Assessing complex technical collateral
The central challenge was to secure the loan in an unconventional way. The fund not only had to minimize the risk of a potential loan default, but above all accurately assess the actual realizable value of the physical fixed assets—especially the highly specialized machinery for plastic injection molding. This involved addressing three crucial questions: What is the current condition and maintenance status of the machines? Which alternative use scenarios – such as in secondary markets or in other industries – would be realistic in the event of liquidation? And what specific risks do the machinery itself and the associated technical know-how pose for the security of the deal?
Rapid, Targeted Expert Intervention
To meet the tight deadlines of the due diligence, a 3-day express project was initiated. The strategy was based on the immediate deployment of a highly specialized expert in plastic injection molding, who was to carry out the following tasks on site: a physical inspection of the entire machinery fleet, including interviews with technical management and maintenance teams, as well as the preparation of a feasibility report taking into account the market for used machines and alternative applications.
Risk profile sharpened through technical analysis
The selected expert conducted the on-site analysis within the tight timeframe and developed a comprehensive assessment of the machinery fleet. Each individual machine was classified in detail – regarding quality, age, and degree of wear. Through targeted interviews with those responsible, he also uncovered critical, previously undisclosed information, such as upcoming major maintenance or technical bottlenecks, which were crucial for the evaluation. Finally, the expert prepared a detailed report, which not only presented the current market value of the equipment but also analyzed its potential for alternative applications – for example, in the automotive supplier industry or medical technology. In doing so, he provided a solid data foundation that clearly highlighted both risks and opportunities.
